China’s Regulatory Crackdown on Property to Ease, Tech Firms Remain Under Pressure
- March 4, 2022
- Posted by: Quatro Strategies
- Category: Legislation
China’s common prosperity policy will not only aim to close the widening wealth gap but it will also shape the country’s regulatory approach, with some sectors seen crucial for the economy getting more support. As part of the push, it is expected that the failing property sector, accounting for a quarter of Chinese economy, will get more regulatory support. Crackdowns on internet firms will possibly remain due to Beijing seeing it as the source of disorderly capital expansion.
A regulatory divergence is expected in China’s annual parliamentary meeting, which starts on Saturday. Policymakers could unveil more stimulus to boost slowing economic growth.
The property sector has seen some ease of rules since the beginning of this year. Debt ridden property developers could find some room to operate again after coming on the brink of collapse. Beijing’s move underlines the push to re-accelerate economic growth as war in Ukraine adds more uncertainty.
Last year, China had imposed a broad regulatory crackdown on a wide range of industries, leaving both small and large companies operate in an uncertain environment as part of Xi’s “common prosperity” push. Technology and property sectors were especially hit hard, seeing revenues plunge and huge sell-off in their stocks and bonds.
However, Beijing eased the crackdown on property sector since the end of last year and has taken a number of initiatives to help revitalize the industry. Part of the effort has included making it easier for large and state owned enterprises to raise funds and allowing local governments to lower mortgage rates and down payment ratios.
The ease of crackdown was most likely derived from the regulators’ concern about the knock on effects on the broader economy.
Meanwhile, technology sector has seen even tighter regulations, affecting everything from overseas listings to direct bans on some industries along with a continuous stream of penalties.
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